MODULE 21(ACTIVITY 1)

Name: MYLENE NELLAS HERAGA Class Number: BLOCK 4

Section: BSA 1-COC-A Schedule: W/S 8am-12pm Date: OCT 23,2021

Activity 1: What I Know Chart

What I Know Questions: What I Learned

For Profits , the profits will What are the rules in I’ve learned that
be divided according to the distributing profit and A partnership agreement is
partners’ agreement. And if loss? an internal business
there is no agreement: contract that outlines
Share of capitalist partner specific business practices
is according to his capital for the partners of a
contribution (according to company. This document
ratio of original capital helps establish rules for
investment or in its how the partners will
absence, ratio of capital manage business
balances at the beginning responsibilities, ownership
of the year). And share of and investments, profits
industrial partner such and losses, and company
share as may be just and management. Additionally,
equitable under the Partnership Agreement
circumstances. For helps to avoid conflict
Losses, the losses will be which may arise between
divided according to the partners. Where the
partners agreement. If terms of a partnership are
there is no agreement as not clearly set out and
to the distribution of losses recorded, disputes may
but there is an agreement arise over ownership
as to profits, the losses division, the roles and
shall be distributed responsibilities of the
according to the profit partners, and the division
sharing ratio. In the of assets upon termination
absence of any of the partnership.
agreement: Share of
Capitalist partner is
according to his capital
contribution (according to
ratio of original capital
investment or in its
absence, ratio of capital
balances at the beginning
of the year). And Purely
industrial partner shall not
be liable for any losses
because he cannot
withdraw the work already
done by him.
The effect of correction will How correction of prior
be divided based on the
applicable profit and loss affects the distribution of
ratio If. an error resulted in profit and losses?
an understatement
(overstatement) of profit in
previous periods, a conditions
correcting entry would be
needed to increase
(decrease) capital.
In this regard, Article 1,008
of the 2002 Civil Code
states that “any contractual
provision that excludes a
partner from sharing in the
company’s profits and
losses is null and void”.
Partnership was
established for common
benefit or interest of the
partners. Hence,
stipulation which excludes
one or more partners from
any share in the profits or
losses is void. Note
further that only the
agreement as to profit and
loss is void not the
partnership itself.
I’ve learned that Errors
period errors does must be distinguished from
changes made to prior
period estimates that had
been based on information
that best reflected the
and
circumstances that existed
at the reporting date.
Errors in financial
statements reduce the
reliability of information
presented. Errors must
therefore be discovered
and corrected on a timely
basis to ensure that users
can rely on the information
contained in the financial
statements.
Is it valid to exclude a I’ve learned that the profit
partner in the and loss of the partnership
distribution of losses? must be divided in the
Why? Why not? manner stipulated, and if
the agreement should only
refer to the participation of
each partner in the profits
then their corresponding
share of the losses shall
be in the same ratio. In the
absence of an agreement
the share of each partner
in the profits and losses
shall be in proportion to
what he may have
contributed. The partner
who contributes his
services only shall receive
a share equal to the one
who has contributed the
least. If besides his
services he should have
contributed capital, he
shall also receive the
proportional share which
may pertain to him.